Welcome to the Q&A Forum

Keep in mind that the goal here is usually not to "punish" the paid link, but instead to ignore it. If Google punished sites for paid links, then that competitor would still buy the links, but would just have them point to your site so you get punished! Ultimately some links that are instantly obvious to humans as artificial and paid are very hard for computers to algorithmically detect without also throwing out tons of valid links. Over the long haul (years, not months) Google does steadily get better at it.